ETFs with a Thematic ESG approach focus on a specific ESG theme such as Clean Water or Gender Equality. They invest accordingly to any of the three pillars of ESG, or a combination of them, with the underlying idea of a common theme such as Renewable Energy.
The Thematic ESG strategy has seen tremendous growth over the past few years with a lot of new ETF launches. Many of those Thematic ESG ETFs can be linked to some extent to a specific Sustainable Development Goal, so investors that are looking to invest accordingly to the sustainability principles expressed by the United Nations can easily find the right match amongst ETFs using this ESG strategy.
Which Thematic ESG ETFs are trending?This year, Equity ETFs that follow a thematic ESG strategy have received roughly $3.7 billion in net inflows, among growing interest in clean energy, uranium & nuclear, carbon credits, and climate benchmarks.
This could be explained by the long-term plan of governments and corporations to decarbonize economies and business activities. However, the most recent and direct catalyst for the growing interest in Alternative energy ETFs (mainly nuclear) is the Russia-Ukraine War. European nations depending on Russian oil & gas to power economies have seen their energy prices skyrocket and their economies on the brink of collapse. The crisis highlights the vulnerability of most European economies and their dangerous reliance on foreign energy resources. Investors are betting that policymakers will take action to deploy more investments into the clean energy space and become energy independent. Other investors are hoping to make a quick gain from the rising prices of key "green commodities", such as Uranium and Lithium.
5 most popular ESG Thematic Equities ETFs in AmericaAmerica-domiciled ESG thematic equity ETFs drew $1.2 billion of net inflows from investors this year. ETFs which witnessed the highest inflows are:
Travel & Leisure ETFs have entered emergency landing protocol as soaring oil and gas prices add more operational costs to airlines, hotels, and cruise lines.
The Russia-Ukraine war, which is mostly to blame for rising energy costs, didn't help the industries either after disrupting air travel flow and tourism across Europe and Asia. On the healthcare front, China entered the war again with the Covid-19 demons and put over 37 million people in lockdown (CNN) after witnessing an unusual spike in Covid-19 cases.
The violent headwind affecting the travel & leisure businesses have sent Travel & Leisure ETFs deep into the red zone, with average losses of -15% year-to-date. Despite the crash, investors have added $700 million into the ETF line-up — betting on a peaceful ending to the ongoing war and a long-awaited final nail to the pandemic coffin.
US & Canada Investors: How to invest in Travel & Leisure ETFsInvestors looking for a potential bargain in the Travel & Leisure ETFs space can explore the U.S. Global Jets ETF (JETS), Invesco Dynamic Leisure and Entertainment ETF (PEJ), and ETFMG Travel Tech ETF (AWAY) – among others.
The JETS ETF seeks to track the U.S. Global Jets Index and provides exposure to the global airline industry, including airline operators and manufacturers from all over the world. In terms of country exposure (as of Dec.31, 2021), the U.S. based holdings dominate with 75%, followed distantly by Canada (4.85%), Japan (2.83%) and Brazil (2.22%). Airlines stocks represent 74% of the portfolio, transportation infrastructure 12.86%, internet 8.04%, and other 5%.
The top leading names as of March 15th, 2022, are American Airlines group (10.53%), United Airlines Holdings (10.44%), Delta Airlines (10.29%), Southwest Airlines (9.85%), and JetBlue Airways (3.09%).
JETS has a total expense ratio of 0.60% and trades primarily on the NYSE. JETS, PEJ and AWAY have attracted $360, $98, and $28 million of net inflows respectively in 2022.
Canadian investors can access the "air space" through the Harvest Travel & Leisure Index ETF (TRVL). The fund seeks to track the Solactive Travel & Leisure Index TR and invests in airlines, hotels, resorts, cruise lines, casinos & gaming, hotel & resort REITs, and leisure facilities listed in a regulated stock exchange in North America. Some of the big holdings include Marriott International (9.6%), Booking Holdings (9.3%), Airbnb (9.1%), Hilton Worldwide Holdings (8.4%), Expedia Group (5.6%), and Southwest Airlines (5.4%) — to name a few.
TRVL has a total expense ratio of 0.40% and trades on the Toronto Stock Exchange.